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Connexus : Issue 42
On the back of the fndings, Abacus has launched its Balance Banking campaign as a means of addressing the imbalance, encouraging national debate and calling for a banking system review. "Over the past two years we've seen the major banks increasing their control of the market and their market share to a level we think is concerning, not just for other participants in the market, but for consumers and the community generally,” says Abacus chief executive offcer Louise Petschler. Banking competition hit politicians' radars back in 2010 when Treasurer Wayne Swan touted mutuals as a potential ffth pillar to take on the big four. While measures to allow easier account switching and more transparency around banking costs have been implemented, the major banks have taken advantage of acquisitions and a marketing blitz since the GFC to increase their share of retail banking business to about 80 per cent today. "We have policy issues where we believe government can do more to promote and strengthen the ability of mutuals to compete with the major banks,” says Petschler. "We're not seeing other players coming into what’s a very lucrative market for the big four. And we're not seeing consideration of some of the systemic issues behind how the big four are able to exercise their market power within our economy.” The Balance Banking campaign is seeking an examination of those systemic factors through an independent inquiry. "For us, the whole logic of Balance Banking is about making sure consumer interests are promoted and balance is introduced in terms of the way the market is structured,” says Petschler. “Hopefully, with the campaign, we can attract a variety of voices and bring this conversation to the national agenda in what is going to be a busy election year.” Highlighting strengths Balance Banking represents a major commitment from the customer owned banking sector to a campaign that includes an interactive website (ww w.balancebanking.com.au) with key market facts and information, opinion polls and opportunities to engage in social media platforms (see panel on page 33). Abacus members have embraced the initiative, believing it gives them a chance to highlight strengths such as market-leading customer satisfaction. Despite having 4.5 million customers and $85 billion in assets, the sector remains locked ...the whole logic of Balance Banking is about making sure consumer interests are promoted... Louise Petschler, CEO, Abacus Barriers to switching remain Consumer group Choice believes breaking down the market dominance of the major banks has become a battle of the minds. More speci cally, consumers' minds. Although progress has been made in recent years to remove barriers to switching, Choice chief executive ofcer Alan Kirkland says it is clear that many banking consumers still wrestle with the idea of switching institutions. “We’re really happy with the changes that have been made around account switching," he says. "We'd like to see the next phase implemented because that will remove even more of the barriers to switching. "But we also recognise that, despite what we might do at a systems level, there are many psychological barriers to people moving their bank accounts.” Choice launched its own campaign, Better Banking, in late 2010 with a view to galvanising public desire for better, more exible and responsive banking in Australia. Kirkland is pleased with the range of outcomes from the campaign, but admits there is still consumer "stickiness" to the major banks in the afermath of the global fnancial crisis. "To some extent, people still think switching is harder than it actually is." Kirkland supports Abacus's Balance Banking campaign and its call for an independent review of the banking sector. "We think it's better that reform in the nancial services system is done in this broad way, where every now and then you take a look at the entire system and map out a program of reform. We think that's better for consumers and better for industry than piecemeal reform." While he doesn't see the major banks' multi- branding strategies as being the most important issue at the moment, he adds that it's critical that consumers fully understand banking products and the fees, charges and interest rates they incur. "As long as consumers can really make informed choices about the nature of the products and the bundles of products they're considering, then we're probably less concerned about the ownership structures that sit behind those products." Disclosure statements are ofen too complicated, he says. “They’re generally very complex documents and they probably don't assist consumers to make informed decisions about their range of needs." CoverStory 28 Connexus